When it comes to home financing, a mortgage broker serves as a liaison between potential homeowners and various banking lenders. Using their expertise and extensive network, mortgage brokers not only streamline the process of securing a home loan but also ensure that you are matched with a loan that best fits your financial situation and optimize your journey to homeownership.
View Point On Mortgage Brokers
Mortgage brokers represent the borrowers’ interests
Mortgage brokers can help you shop for a loan that fits your unique situation
Mortgage brokers can help you save time and money by helping you navigate the process and compare loan options
How Mortgage Brokers Work
When you’re ready to borrow money to buy a home, you’ll likely start investigating options with your usual bank, credit union or a mortgage broker. But most of these institutions can only offer their own products, so it’s worthwhile to consider working with a mortgage broker.
Brokers typically work with various banking lenders and shop for the best pricing and programs available to their clients. A mortgage broker works for the client and not the lender. The broker represents the interest of the borrowers and helps them put together the loan application, collect the required documents, and submit it for the lender to approve, among other things. The mortgage broker works with the borrower or client from the start of the application until the loan closes.
Mortgage Brokers Works With Various Clients
Mortgage brokers work with various business and residential mortgage shoppers, including first-time homebuyers. Brokers can also help find specialized products for unique or non-conventional situations. Brokers are nimbler and typically have arrangements with different lenders to find a program that might not be available at a bank or credit union. This could include less-than-perfect credit loans or other unordinary circumstances.
For example, a mortgage broker may work with:
Self-employed borrowers
Foreign national borrowers
Borrowers with limited credit history or limited income
Multi-family home loans
Investment loans
Construction loans
Second home loans
A mortgage broker can be beneficial if you seek a less-common loan product.
How Mortgage Brokers Help Save You Time
By providing a wide selection of loan products from several lenders at once, a mortgage broker can do some research legwork for you.
Suppose you’re a borrower with a unique financial situation or borrowing needs. In that case, the mortgage broker can help you avoid the frustration of seeking loans from institutions that don’t meet your needs.
If you’re new to borrowing, a mortgage broker can also act as a helpful guide through the loan approval process. A good broker can help you understand:
How much home you can afford
How to compare different loan types, such as a fixed-rate mortgage or adjustable-rate mortgage
How the loan application, approval and closing process works
How and why pre-qualification letters work
Assembling all necessary documentation and paperwork
How Mortgage Brokers Help Save You Money
A mortgage broker will review your unique financial situation before researching loans that could fit your circumstances and home savings goals. These include typical house-purchase factors such as:
Your credit score and history
The amount of cash you have for a down payment
How much cash you have available for closing costs
Existing debts
Your income
The monthly payment you can afford
The mortgage broker can help you find home loans with the qualities important to you, such as a low interest rate, reduced points or low down payment.
Because the Broker has many lending relationships, they most often find the best interest rates and lowest fees for their customer.
Finally, an ongoing relationship with a trusted mortgage broker can also help you save money in the future. If you’re currently in a higher-rate loan or an ARM, the broker can help alert you to lower rates to refinance. Or the broker can let you know when a good HELOC rate comes on the market, which could allow you to pull equity from your home.
How a Mortgage Broker Gets Paid
A banking lender or borrower can pay the mortgage broker, but not both.
Brokers are typically paid a fee for specific loan services, paid by either the borrower or lender. If you’re paying the fees as a broker client (buyer paid compensation), this payment can be negotiated. In most cases unless otherwise discussed, the banking lender pays the mortgage broker compensation. With buyer paid commission, a buyer is able to secure a much lower interest rate not only saving on their monthly mortgage payment but over the term of their loan.
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